YPO’s mission to help small firms win public contracts

YORKSHIRE Purchasing Organisation is on a drive to improve its engagement with small and medium-sized enterprises (SMES) so they are better placed to bid for public sector contracts.

Wakefield-based YPO, which is the UK’s largest public sector buying organisation, and is an employer of 430 people, looks after £0.5bn worth of public sector spend in its role, which involves buying on behalf of public bodies.

Its supplies side of the business, which works mainly with the education market, providing stationery, cleaning equipment and exercise books, currently sees 75 to 80 per cent of contracts go to SMEs, with over 50 per cent of these being based in the Yorkshire region, said Paul Smith, procurement and supply chain director.

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However, YPO is looking to boost SME involvement, particularly on its procurement service side of the business, which sets up framework contracts for public bodies. This primarily involves energy supply, which Mr Smith described as “not a local SME sort of buy”. But it wants more SMEs to get involved in areas such as temporary agency staff, consultancy, learning and development and social care, to which they are better suited, according to Mr Smith.

YPO is focusing this year on growing its Dynamic Purchasing System, an electronic system which “enables easier access for SMEs”, said Mr Smith.

“Traditionally what would happen is a framework contract would be let and you’d go out to tender and you would go through PQQ [Pre-Qualification Questionnaire] exercises, you’d go through the full tender exercise and then you would award the contract, maybe to five or six suppliers on the framework.

“And that would be the contract for four years.

“The Dynamic Purchasing System is a piece of EU legislation, which allows you, as long as you do it electronically, to add suppliers to it during the life of that framework contract.”

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As requirements come up, they get published on the system and suppliers can bid. Mr Smith said: “It’s much more flexible. It means that four years down the line you’re keeping your framework refreshed. But also it’s a lower cost of entry to SMEs because it’s much easier to apply and win business.”

The trick is to balance the need for the public sector to save money via economies of scale with the need to break down large contracts into smaller lots so SMEs can bid, explained Mr Smith.

He said: “It feels like there’s a contradiction, and to some degree there is, but actually I think fundamentally they are complementary. I think it depends on each category. Things that need to be bought nationally, energy, your fleet, even things like IT hardware and laptops, those items benefit from those economies of scale... but they are also not traditionally where SMEs are strong. Where SMEs are strong are those people-based businesses.”

Mr Smith said YPO is keen to support the local supply chain, but added that public sector procurement rules state it has to be fair and transparent for all, regardless of size and regardless of location.

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He said: “But there are a number of things we can do to make sure we have really good engagement with local SMEs which means that they are better placed to win some of those tenders.”

YPO has an e-sourcing site so suppliers can be alerted to any tenders coming up, and it also publishes opportunities via LinkedIn and Twitter.

Last year, local authority-owned YPO’s supplies business turned over £108.4m.

It spent close to £400m on behalf of public bodies on framework contracts last year, getting back £3.7m in management fees.

Overall, of that £108.4m trading spend and £3.7m worth of rebate, YPO made a profit of £8.6m, which, after investment, is redistributed back into the public sector.